Poultry prices lift Sanderson Farms to profit
by Meat&Poultry Staff
LAUREL, Miss. – Sanderson Farms, Inc. recorded fourth quarter and fiscal year profits driven by higher poultry prices.
Sanderson Farms earnings were $9.3 million, or 41 cents per share, for the three months ended Oct. 31. This compares to a loss of $21.6 million, or 97 cents per share in the comparable year-ago quarter. Net sales for the quarter were $648.4 million compared with $559.8 million for the same period in 2011.
"The fourth quarter of fiscal 2012 marked the end of another challenging year for Sanderson Farms and the poultry industry,” said Joe F. Sanderson, Jr., chairman and CEO of Sanderson Farms. "We reported record annual sales of $2.386 billion, a 20.6 percent increase over fiscal 2011. However, while poultry markets improved compared to fiscal 2011, grain prices surged to record levels during August as a result of drought conditions across much of the Corn Belt. As a result, the improvement in poultry market prices was offset in part by higher feed costs.
“Our increased sales and return to profitability during the year reflect higher production as we completed the ramp up to near full production at our Kinston, North Carolina, facility,” he added. “For the year, we sold 2.952 billion lbs. of dressed poultry, another record, compared with 2.794 billion lbs. in fiscal 2011.”
The sales for the company advanced 16 percent on added production from the company Kinston, NC processing facility.
“The start-up of our new Kinston, North Carolina, poultry complex continued during the first half of fiscal 2012,” Sanderson said. “The increased production at the Kinston plant during fiscal 2012 more than offset the four percent production cut instituted at our other plants in January 2012 to better balance our production with our customers’ demand.
“Because we expect demand from our food service customers to remain soft until American consumers regain their confidence and the employment outlook brightens, and in light of continued high prices for grain and uncertainty regarding supply, we have instituted the additional two percent production cut we announced in August of 2012,” he continued. “We currently plan to leave our production cut in place through fiscal 2013.”
Full-year net sales were $2.386 billion compared with $1.978 billion for fiscal 2011. Net income for the year totaled $53.9 million, or $2.35 per share, compared with a net loss of $127.1 million, or $5.74 per share, for 2011.
“We are pleased that our profitability during fiscal 2012 allowed us to significantly reduce outstanding debt and strengthen our balance sheet, Sanderson said. “As a result, we believe we are well positioned to continue our growth strategy once market conditions improve.
“As of Oct. 31, 2012, our balance sheet reflected $896.5 million in assets, stockholders’ equity of $550.1 million and net working capital of $262.2 million,” he said. “Our total long-term debt at year-end was $150.2 million. A strong balance sheet is an important advantage in our industry, especially given today’s economic environment, and provides us with the financial strength to not only support our growth strategy, but also to manage through challenging conditions.
“We deeply appreciate the hard work and dedication to excellence of everyone associated with our company, including our employees and growers,” Sanderson concluded.